Indian handset makers to government: Don't change current duty structure

NEW DELHI: India’s local manufacturers have asked the finance ministry to delay by two years changing the duty structure which will make import of batteries, chargers and wired headsets more expensive, but will make local manufacturing of these products cheaper.

Local electronics manufacturing association, in a recent letter, has asked the government to continue with the current duty differential for two years, giving the industry time to prepare and bring component makers and local manufacturing to India to create a required ecosystem.

“The current available duty exemption may kindly be made available for at least two more years so that the industry and ecosystem partners can be prepared,” said Ravinder Zutshi, chairman of Mobile and Communication council under Consumer Electronics and Appliances Manufacturers Association (CEAMA).

“Manufacturers supporting the Make in India programme are finding the proposal extremely disadvantageous. The local component ecosystem is still not fully in place, resulting into dependence on international ecosystem for components,” the group said in a March 14 letter.

The government has levied basic customs duty (BCD) of 10%, countervailing duty (CVD) of 12.5% on imports of chargers, adapters, battery, wired headsets and speakers used in mobile phones.

Coupled with Special Additional Duty of 4%, the total duty cost comes to 29.4%, making the duty differential of 27% if the products are made locally. CEAMA joins Indian Cellular Association, which represents handset makers in India, which has sought a delay inimplementation of the government’s proposals — to June in case of making chargers locally and till September 2016 in case of manufacturing of batteries.

The two-year postponement, CEAMA said, will ensure local manufacturing of majority of components, thus building a much-needed component ecosystem in the country.

The lobby group said the changes in duty structure will hit companies manufacturing locally — Videocon, Micromax, Lava, Intex, Karbonn, Zen, Spice, etc. — as it would make mobile phones costly for end customer and in turn, the industry.

And any forced price increase would hurt in as intensely competitive a market as India. Conversely, it would hurt the brands’ margins if the cost increase isn’t passed on to the consumers.